Disputes regarding residential construction defects require the use of special procedures. Homeowners and developers must understand and utilize the procedures in the Texas Residential Construction Liability Act (“RCLA”) (Tex. Prop. Code §§ 27.001 to 27.007), particularly the pre-litigation notice and settlement offer procedures.
The definition of a “construction defect” (found in Tex. Prop. Code § 27.001(4)) that the RCLA applies to is so broad that it “need not necessarily involve defective construction or repair.” Timmerman v. Dale, 397 S.W.3d 327, 331 (Tex. App.—Dallas 2013).
In a normal breach of contract or Deceptive Trade Practices Act (“DTPA”) case, the plaintiff can recover for the injuries that the plaintiff suffered, but in an RCLA case, the plaintiff can recover only the damages items on the list in Tex. Prop. Code § 27.004(g). Timmerman, 397 S.W.3d at 331.
The contractor who fails to make a reasonable settlement offer after receiving an RCLA notice “loses the benefit of all limitations on damages and defenses to liability provided for in section 27.004, including both the limitation . . . on the types of damages recoverable . . . and the limitation . . . on the amount of damages recoverable . . . .” Perry Homes v. Alwattari, 33 S.W.3d 376, 384 (Tex. App. 2000); Tex. Prop. Code § 27.004(f) (“If a contractor fails to make a reasonable offer under Subsection (b), the limitations on damages provided for in Subsection (e) shall not apply.”).
The damages categories allowed by the RCLA include the following:
“(1) the reasonable cost of repairs necessary to cure any construction defect;
(2) the reasonable and necessary cost for the replacement or repair of any damaged goods in the residence;
(3) reasonable and necessary engineering and consulting fees;
(4) the reasonable expenses of temporary housing reasonably necessary during the repair period;
(5) the reduction in current market value, if any, after the construction defect is repaired if the construction defect is a structural failure; and
(6) reasonable and necessary attorney’s fees.”
Tex. Prop. Code Ann. § 27.004.
Under breach of contract, the homeowner generally must demonstrate that either the warranty of good and workmanlike construction or the warranty of habitability has been breached. “A homebuilder impliedly warrants that a new house has been constructed in a good and workmanlike manner and is suitable for human habitation.” Yost v. Jered Custom Homes, 399 S.W.3d 653, 662 (Tex. App.—Dallas 2013). The Texas Supreme Court has held that homeowners cannot waive or disclaim the warranty of good and workmanlike manner of performance. The Melody Homes decision largely relied upon Tex. Bus. & Com. Code Ann. § 17.42, which provides that consumers generally cannot waive provisions of the DTPA, including the breach of warranty provisions (Tex. Bus. & Com. Code § 17.50(a)(2)). While the warranty cannot be disclaimed outright, it can be superseded by a contract that fills gaps in the warranty. Gonzales v. Sw. Olshan Found. Repair Co., LLC, 400 S.W.3d 52, 59 (Tex. 2013). To supercede the implied warranty, an express warranty must “specifically describe the manner, performance, or quality of the services.” Id.
In a DTPA suit, the homeowner needs only to meet the “producing cause” standard. Metro Allied Ins. Agency, Inc. v. Lin, 304 S.W.3d 830, 834 (Tex. 2009). “Producing cause” means only cause-in-fact, whereas, the normal “proximate cause” of damages standard requires both cause-in-fact and “foreseeability.” Blue Star Operating Co. v. Tetra Techs., Inc., 119 S.W.3d 916, 920 (Tex. App. 2003). Accordingly, a residential construction defect case is easier to win on a DTPA theory than another theory because the plaintiff does not have to show that the contractor should have anticipated the damages. “Foreseeability requires that the actor, as a person of ordinary intelligence, would have anticipated the danger that his negligent act created for others.”
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Notice and Settlement Procedure, Residential Construction Liability Act |
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| Action | Timing |
| Written notice by certified mail, return receipt requested, to the contractor, at the contractor’s last known address, specifying in reasonable detail the construction defects that are the subject of the complaint. Tex. Prop. Code § 27.004. | Sixty days preceding the date a claimant seeking from a contractor damages or other relief arising from a construction defect initiates an action. Tex. Prop. Code § 27.004(a). |
| Claimant shall provide to the contractor any evidence that depicts the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect, including expert reports, photographs, and videotapes, if discoverable under T.R.C.P. 192. | On the request of the contractor. Id. |
| The contractor shall be given a reasonable opportunity to inspect the property to determine the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect. Id. | During the 35-day period after the contractor has received the written notice, upon the written request of the contractor. Id. |
| Contractor may make a written offer of settlement to the claimant. The offer must be sent to the claimant at the claimant’s last known address or to the claimant’s attorney by certified mail, return receipt requested. The offer may include either an agreement to repair or have repaired partially or totally at the contractor’s expense or at a reduced rate any construction defect and shall describe in reasonable detail the kind of repairs to be made. Tex. Prop. Code § 27.004(b). | Not later than the 45th day after the date the contractor receives the pre-suit notice. Tex. Prop. Code § 27.004(b).
An offer not accepted before the 25th day after the date the offer is received by the claimant is considered rejected. Tex. Prop. Code § 27.004(i). |
| Any repairs in the proposed settlement | Shall be made not later than the 45th day after the date the contracter receives written notice of acceptance of the settlement offer, unless completion is delayed by the claimant or by other events beyond the control of the contractor. Id. |
| If the claimant considers the settlement offer to be unreasonable then the claimant shall advise the contractor in writing and in reasonable detail of the reasons why the claimant considers the offer unreasonable. Id.(1). | On or before the 25th day after the date the claimant receives the offer. Id.(1). |
| The contractor may make a supplemental written offer of settlement to the claimant by sending the offer to the claimant or the claimant’s attorney. Id.(2). | Not later than the 10th day after the date the contractor receives notice of why the claimant considers the initial offer unreasonable. Id.(2). |
Copyright 2018, Ian Ghrist, All Rights Reserved.
Disclaimer: This blog is for informational purposes only. Do not rely on any part of this blog as legal advice. Instead, seek out the advice of a licensed attorney. Also, this information may be out-of-date.